April 12th, 2022 9:08 AM by Richard Sardella MLO.100007700/NMLS 233568
The headlines after the 8:30 am ET release of March CPI were, ‘inflation continues to increase’, and it did. CPI was expected at +1.1% m/m, it increased 1.2%, yr./yr. expectations were +8.4%, it increased 8.5%. The core CPI (ex food and energy) declined; expected +0.5%, as reported +0.3% m/m, yr./yr. expected +6.6%, as reported +6.5%. The minor decline in the core sent interest rates lower and MBS prices higher after both increased yesterday. In last night’s trade the 10 yr. note increased to 2.82%, 4bps high than the 5 pm close yesterday. The report about as expected and although the overall CPI was slightly higher, with the core declining the reaction pushed the 10 yr. note down to 2.71% and MBSs up 30 bps from yesterday. As noted yesterday the 10 yr. note technical indicators were showing very oversold levels, the reaction this morning more technical than fundamental. The core was slightly lower seen as a plus that food and energy prices stabilized somewhat in March.
The energy index was up 11.0% month-over-month and 32.0% year-over-year. The gasoline index was up 18.0% month-over-month, accounting for over half of the monthly increase in the all items index, and up 48.0% year-over-year. The food index was up 1.0% month-over-month and 8.8% year-over-year. The shelter index was up 0.5% month-over-month and 5.0% year-over-year. The index for used cars and trucks declined 3.8% month-over-month. Exclude food, energy, and shelter, and the all items index was up 7.5% year-over-year on an unadjusted basis.
At 9:30 am the DJIA opened +115, NASDAQ +164, S&P +28. 10 yr. at 9:30 am 2.72% -6 bps. FNMA 4.5 coupon at 9:30 am +10 bps and 13 bps better than 9:30 am yesterday.
At 6 am the March NFIB small business optimism index was expected at 95.0 from 95.7, as reported the index dropped to 93.2.
At 1 pm Treasury will auction $43B of 10s, reopening the issue from February. Let’s see the demand after the CPI this morning and ahead of PPI tomorrow.
This afternoon at 2 pm the March Treasury budget, expected -$44.8B from -$216.6B in Feb.
10 yr note: 2.71% -7 bp
5 yr note: 2.70% -9 bp
2 Yr note: 2.46% -7 bp
30 yr bond: 2.77% -4 bp
Libor Rates: 1 mo 0.525%; 3 mo 1.021%; 6 mo 1.553%; 1
yr 2.280% (4/11/22)
30 yr FNMA 4.0: N/A
30 yr FNMA 4.5: @9:30 102.25 +10 bp (+13 bp from 9:30 am yesterday)
30 yr GNMA 4.0: N/A
Dollar/Yuan: $6.3690 -$0.0011
Dollar/Yen: 125.25 -0.14 yen
Dollar/Euro: $1.0874 -$0.0012
Dollar Index: 99.93 unch
Gold: $1968.80 +$20.60
Bitcoin: 40,377 +527
Crude Oil: $99.41 +$5.12
DJIA: 34,553 +240
NASDAQ: 13,677 +265
S&P 500: 4460 +47
Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.